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The following is issued on behalf of the Hong Kong Monetary Authority:
The Hong Kong Monetary Authority (HKMA) announced today (April 17) the composite interest rate at the end of March 2008.*
The composite interest rate, which reflects the average cost of funds of banks, fell by 37 basis points to 0.98% at the end of March 2008, from 1.35% at the end of February 2008 (see Chart 1 in the Annex). This followed a decrease of 33 basis points in February 2008. The fall in the composite interest rate in March 2008 reflected downward adjustments across-the-board of local interest rates, including savings and time deposit rates, as well as interbank interest rates (see Chart 2 in the Annex).**
"The average cost of funds has dropped in recent months along with the fall in US interest rates. Looking ahead, the composite interest rate will continue to be influenced by changes in US interest rates and domestic liquidity conditions," said Mr Peter Pang, Deputy Chief Executive of the HKMA.
The historical data of the composite interest rate from the end of the fourth quarter of 2003 to the end of March 2008 are available in the Monthly Statistical Bulletin on the HKMA website (www.hkma.gov.hk). The next data release is scheduled for May 19, 2008 and will provide the composite interest rate at the end of April 2008.
*The composite interest rate is a weighted average interest rate of all Hong Kong dollar interest bearing liabilities, which include deposits from customers, amounts due to banks, negotiable certificates of deposit and other debt instruments, and Hong Kong dollar non-interest bearing demand deposits on the books of banks. Data from retail banks, which account for about 90% of the total customers' deposits in the banking sector, are used in the calculation. It should be noted that the composite interest rate represents only average interest expenses. There are various other costs involved in the making of a loan, such as operating costs (e.g. staff and rental expenses), credit cost and hedging cost, which are not covered by the composite interest rate.
**Local banks cut their best lending rates on March 20, 2008 by 50 basis points. They also adjusted downward their savings deposit rates, albeit by lesser magnitudes. During March, HIBORs fell across-the-board by 18 to 130 basis points.
For further enquiries, please contact:
Thomas Chan, Senior Manager (Press), at 2878 1480 or
Hing-fung Wong, Manager (Press), at 2878 1802
Ends/Thursday, April 17, 2008
Issued at HKT 16:31
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